The government is set to introduce a new fixed tax scheme for retailers in the upcoming federal budget as part of a broader push to bring the retail sector into the tax net, according to sources in the Federal Board of Revenue.

Sources said the proposed scheme will be implemented across the country and is aimed at improving tax compliance among retailers on a nationwide scale.

The proposal is expected to be presented to the International Monetary Fund next week for final approval during talks on tax reforms and revenue measures.

Under the proposed framework, retailers with annual business turnover of up to Rs. 200 million will be required to register with tax authorities. Those falling under the scheme will have to pay a fixed tax of 1 percent on annual turnover up to the same threshold.

Officials said the scheme has been prepared in Urdu to make it easier for small traders and retailers to understand the requirements and comply with the new tax regime.

Unlike earlier proposals, the latest framework will not use the size or area of shops as a basis for taxation, signalling a simpler approach focused primarily on turnover.

Sources said the government is aiming to bring around three million retailers into the tax system under the new framework.

Officials added that tax rates and collection targets are likely to remain relatively low in the initial phase to encourage wider registration and help document the retail sector more effectively in the next budget cycle.